Domestic sales for most of the Automobile OEMs have continued to maintain their recovery in the month of September 2017 following the growth in the month of August 2017. Demand for trucks grew on stricter implementation of load restrictions and expected rollout of e-way bill under the Goods and Services Tax. The festive season is likely to witness further ramp up in sales of Passenger vehicles and Two Wheelers.

Production

The industry produced a total 14,675,828 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in April-September 2017 as against 13,441,520 in April-September 2016, registering a growth of 9.18 percent over the same period last year.

Domestic Sales

The sale of Passenger Vehicles grew by 9.16 percent in April-September 2017 over the same period last year. Within the Passenger Vehicles, Passenger Cars, Utility Vehicle and Vans grew by 6.63 percent, 17.81 percent and 2.52 percent respectively in April-September 2017 over the same period last year.

Maruti Suzuki India sold 150,521 units (+9.64%) in the month of September 2017. Demand for the five compact cars (Swift, Celerio, Ignis, Baleno and Dzire) rose smartly by 44.7% year on year to 72,804 units (September 2016: 50,324), reflective of the surging demand for the premium Baleno hatchback and the new Dzire sedan.

Mahindra & Mahindra registered sales of 25,327 units in September (+23%), compared to the 20,537 units sold in September 2016. While UVs, including the Scorpio, Bolero, XUV500, TUV300 and KUV100 accounted for the chunk of the volumes selling 24,109 units (September 2016: 19,206), cars and vans sold 1,218 units (September 2016: 1,331).

Tata Motorshas reported sales of 17,286 passenger vehicles, a YoY growth of 5.71 percent (September 2016: 16,351) and mainly driven by demand for the Tiago, Tigor and Hexa. The recently launched Nexon compact SUV has also received a strong response in the market. Tata Motors says its cumulative PV sales for the April-September 2017 period are 81,417 units, a growth of 12 percent compared to 72,665 units, in the same period last fiscal.

The overall Commercial Vehicles segment grew by 5.96 percent in April-September 2017 as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) declined by (-) 6.56 percent, however, Light Commercial Vehicles grew by 14.76 percent in April-September 2017 over the same period last year.

Ashok Leyland Ltd.’s sales rose at the fastest pace in a year as demand for trucks grew on stricter implementation of load restrictions and expected rollout of e-way bill under the Goods and Services Tax. Sales increased for the fourth straight month in September 2017 as the company sold 15,370 units, 28 percent higher compared to the same month last year. Medium and heavy commercial vehicle sales increased 32 percent year-on-year, the highest in 12 months. Volumes of light commercial vehicles rose 15 percent on a yearly basis.

Tata Motors overall commercial vehicles sales in September 2017, in the domestic market were at 36679 nos. higher by 29% over September 2016. The M&HCV trucks segment grew by 25%, at 12259 nos., in September 2017. This segment witnessed strong growth in demand on the back of continuously increasing acceptance of Tata Motors’ SCR technology, infrastructure development led by government funding and restrictions on overloading creating greater demand for new high tonnage vehicles, especially for the company’s new launches of 37T multiaxle trucks and 49T tractor trailers.

Three Wheelers sales declined by (-) 9.89 percent in April-September 2017 over the same period last year. Within the Three Wheelers, Passenger Carrier sales registered a de-growth of (-) 13.18 percent, however, Goods Carrier grew by 5.18 percent in April-September 2017 over April-September 2016.

Two Wheelers sales registered a growth at 10.14 percent in April-September 2017 over April-September 2016. Within the Two Wheelers segment, Scooters and Motorcycles grew by 17.26 percent and 7.71 percent respectively, while Mopeds declined by (-) 5.63 percent in April-September 2017 over April-September 2016.

The country’s largest two-wheeler maker Hero MotoCorp reported record sales of 720739 units in September 2017. This is an increase of 6.8 per cent over 674961 units sold in the year-ago period. The company recently surpassed record 75 million two-wheelers in cumulative sales since its inception.

The good performance of most of the Two-Wheeler OEMs can be attributed to the revival in rural demand backed by above average rainfall, positive market sentiment, GST-driven price cuts and low channel inventory.

Exports

In April-September 2017, overall automobile exports grew by 10.71 percent. Two and Three-Wheeler Segments registered a growth of 15.22 percent, and 19.42 percent respectively while Passenger Vehicles and Commercial Vehicles declined by (-) 1.34 percent and (-) 28.53 percent respectively in April-September 2017 over the same period last year.

About the Author

Ketan Chaphalkar is a Research Analyst for Investors are Idiots.com and INRBONDS.com. He is passionate about Finance and Economics and is a Mechanical Engineer with MBA in Finance and MSc in Economics.

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